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What Will Generate Future Returns In The Indian Consumer Markets?

By AltG Investment Research Lab On Behalf Of Poornima Vardhan & Taponeel Mukherjee

Photo of India's Consumer Market

The Second Derivative Of Growth Or The Growth Of Growth Will Generate Future Returns In The Indian Consumer Markets.

  • India’s startup funding winter, today’s news pieces around Sharechat and the woes of the Good Glamm Group compared to the euphoric Indian public markets simply tell us one thing—there’s plenty of capital to go around to invest in the Indian Growth Story. However, investors need to understand India’s private market dynamics better and stop chasing illusory growth.

  • The only thing worse than not having capital is wasteful capital chasing non-existent business opportunities. According to our APEXX Formula, as the Indian consumer markets evolve from QSR to healthcare, the next generation of companies that need access to capital and can generate significant Return On Invested Capital over their cost of capital lie in adjacent markets and industries to where the focus has been.

  • For instance, if the QSR business is growing, where are the opportunities in the Protein Supply Chain? If the Hospital Business is growing, where are the opportunities in the hospital supply chain? Most importantly, in which of these subsectors is a Dollar Of Free Cash Flow mispriced due to the “growth of growth rate” not being accounted for accurately?

  • Investors who focus on the growth of consumer-facing B2C industries will face significant challenges, given the large amounts of capital already invested and the number of opportunities being chased. 

  • The real opportunity lies in investing in the “Growth of Growth” per the APEXX Formula. What industries can accelerate their growth as the Indian consumer story gathers momentum?

  • Most importantly, these adjacent industries also need flexible, relatively low-cost capital to manage cash-flow mismatches and latch on to the big growth phases. 

The last three decades have seen a significant focus on growth industries in India. However, the coming decades belong to businesses that can leverage the Indian growth curve and grow at even faster rates.

Disclaimer: In the article "What Will Generate Future Returns In The Indian Consumer Markets?" above - Any views, comments or communication (above or in the past) should not be construed to be investment advice by Alternative Growth (hereafter referred to as “AltG”) in any form whatsoever. AltG does not make an offer to sell or solicit to buy any securities.


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